Yes, these cost-share funds are considered a taxable grant and are reportable income. If you are in the business of farming, you should be able to deduct certain expenses for soil or water conservation or for the prevention of soil erosion on land used in farming. If you receive $600 or more within a calendar year from the State of Kansas, the Kansas Department Administration, Division of Accounts & Reports will issue you a 1099G (Report of Certain Government Payments) on or before January 31, for the payments received in the previous year from the State of Kansas. (Corporations are exempt from 1099 reporting.) Please consult a tax expert for additional guidance.